Financial Accounting BS 6 Semester/Term UOS — University of Sargodha 2017

University of Sargodha

BS 6th Term Examination 2017

Subject: Computer Science Paper: Financial Accounting (SSC-201)

Time Allowed: 2:30 Hours Maximum Marks: 80

Note: Objective part is compulsory. Attempt any three questions from subjective part.

Objective Part (Compulsory)

Q.1. Write short answers of the following in 2-3 lines each: (2*16)

i. What is a simple Transaction

ii. What is Business Entity

iii. What is Revenue

iv. What is a ledger

v. What are Financial Statements

vi. What are the adjusting entries

vii. What is post-closing trial balance

viii. What are Fixed Assets

ix. What are the bad debts

x. What is a Liability

xi. What is Depreciation

xii. What are long term Liabilities

xiii. What is owner's Equity

xiv. What is cash flow statement

xv. What is a partnership

xvi. What is a Credit

Subjective Part (3*16)

Q.2. CLOWN AROUND, INC.

Trial Balance

1-Feb-05

Cash 5400

Accounts Receivable 3400

Accounts Payable 800

Capital Stock 5000

Retained Earnings 700

Dividends 600

Party revenue 1350

Salaries expense 850

Party food expense 250

Travel Expense 80

4900 4900

Clown Around engaged in the following transactions in the following month:

Feb. 2 Paid $ 750 to settle portions of the outstanding accounts payable reported in the trial balance dated

Feb. 1.

Feb. 6 Collected $ 900 in full settlement of the outstanding accounts receivable reported in the trial balance dated

Feb. 1.

Feb. 15 Billed sunflower Child Care $ 375 for clown services. The entire amount is due March

15.

Feb. 20 Billed and Collected $ 180 for performing at several birthday parties.

Feb. 24 Paid salaries of $ 600 for work done in February

Feb. 28 Declared and paid a $ 150 dividend in Ralph, Jackson, the company's only shareholder.

Required:

1. Record the company's February execution in general journal form. Post each entry to the appropriate

ledger accounts.

2. Prepare a trial balance dated February 28, 2005

Q.3. Campus Theater Adjust its accounts every month. Before the company's unadjusted trial balance dated

August 31, 2005. Additional information is needed in preparing the company's adjusting entries for the

month of August. (Bear in mind that adjusting entries have already been made for the first seven months of 2005,

but not for August)

CAMPUS THEATER

Work Sheet

August 31, 2005

Unadjusted Trial

Balance

Dr Cr

Cash 40000

Prepaid Film Rental 12000

Land 20000

Building 120000

Acc Dep Building 14000

Fixture & Equipment 45000

Acc Dep Fixture 12000

Film Payable 10000

Accounts Payable 4400

Unearned adm Rev(YMCA) 1000

Income Tax Payable 4740

Capital Stock 100000

Retained Earnings 40000

Dividends 13000

Admission Revenue 202200

Film Rental Revenue 143300

Salaries Expenses 87000

Film Rental Expenses 91200

Utilities Expenses 14400

Depreciation exp Building 1200

Depreciation exp Fixture 900

Income Expenses 1000

Income Tax Expenses 4740

Other Data:

1. Film rental expense for the month is $ 12000. However, the film rental expense for several months has

been paid in advance.

2. Film equipment is depreciated over a period of 5 years (60 months)

3. The Fixtures and equipment are being depreciated over a period of five years (60 months)

4. Film Payable which is $ 10000 is due on August

31. The company has $ 1000 in its note payable

At August 31, accrued interest on this note amounts to $ 1000.

5. YMCA has paid $ 1000 for the summer camp to be held in the movies on any

weekday afternoon for a fixed fee of $ 200 per movies. On June 28, the YMCA made a $ 1000 advance

payment for the months of August, September and October.

6. The Theater receives a percentage of the revenue earned by Taxis Corporation. The company earns

quarterly during August, the theater has revenue in August. Taxis owes Campus Theater $ 2270, payable on

September

10. No entry has yet been made for this (Accrued Concession Revenue).

7. Salaries owed by employees, but not recorded or paid as of August 31, amount to $ 1700. No entry has

been made for the months of August.

8. Income taxes expense for August is estimated at $ 4200. This amount will be paid in the September 15

installment date.

9. Utilities expense is recorded as monthly bills are received. No adjusting entries for utilities expense are

made at month end.

Instruction:

1. For each of the numbered paragraphs, prepare the necessary adjusting entry (including an explanation

Q.4. The cash account of Banner Company, Inc. for July made the following:

1. The ledger account for cash showed a balance at July 31 of $ 153568

2. The July bank statement showed a closing balance of $ 147568

3. The company made a deposit of $ 10000 on July 31, but the bank in the night depository after

after banking hours on July 31 and therefore was not recorded by the bank on July statement.

4. Outstanding checks at July 31 were checks number 841 for $ 2000 and number 842 for $ 500 representing

service charges for July.

5. A $ 4000 check enclosed with the July bank statement indicated that a non interest bearing note

receivable for $ 4000 from Same Islam, left with the bank for collection, had been collected, and this

amount was credited to the company's account.

6. Comparison of the paid checks returned by the bank with the entries in the accounting records revealed

check number 840 for $ 319, issued on July 15 in payment for computer equipment, had been erroneously

entered to Banner's records as $ 313.

Q.5. Following is a trial balance of “Net Solutions” for the year ended 31st March 2014.

Rs. Rs.

Purchases 20,000 Sales 85,000

Sales Return 1,000 Purchase Return 3,000

Discount on Sales 2,000 Discount on purchases 4,000

Freight 1,500 Commission 2,700

Octroi Charges 1,400 Interest 2,500

Salaries 3,300 Accounts payable 10,000

Insurance 2,200 Bank draft 9,000

Rent 1,000 Capital 81,000

Cash in hand 2,500

Buildings 35,000

Plant & Machinery 30,000

Investments 10,000

Accounts Receivables 10,000

Income Tax 1,000

Drawings 2,000

Bills Receivable 5,000

Trade Marks 2,000

Total 176,200 Total 176,200

Adjustments:

i. Salary payable was Rs. 600

ii. Un-earned commission Rs. 200

iii. Interest due Rs. 300

iv. Provision for bad debts at 5% of A/R

v. Depreciation on plant & machinery at 10%

Required: Prepare income statement and balance sheet after adjustments.

Q.6. State with reasons whether the following should be recorded as revenue or capital.

i. Cost of air-conditioner installed in office.

ii. Freight paid on the purchase of new machinery.

iii. Advertisement expenditure for new product.

iv. Salary paid to staff.

v. Repair and renewals of machinery.

vi. Amount paid for the renewal of contract to supply goods.

vii. Replacement cost of a worn out part of the plant.

viii. Sold goods and earned profit on sales.